Today in crypto: GameStop’s Bitcoin idea and SEC decisions

Strategy’s Bitcoin Holdings under scrutiny as market shifts

Concerns are swirling around software company Strategy after its stock fell more than 11% on Tuesday morning. The sharp drop has raised fears that the company could be forced to sell some of its Bitcoin, which might impact the wider market.

Strategy, previously known as MicroStrategy, is the largest corporate holder of Bitcoin, owning around 499,096 BTC—worth about $44.4 billion. This represents roughly 2.3% of all Bitcoin in circulation. Because of this, any major sell-off from Strategy could have ripple effects across the market.

However, analysts believe a forced liquidation is unlikely. The company’s Bitcoin holdings are backed by $8.2 billion in convertible debt, with maturities extending to 2028 and 2030. This means there’s no immediate risk of a forced sell-off unless extreme conditions arise. Additionally, Strategy’s co-founder and chairman, Michael Saylor, holds a 46.8% voting stake, making it difficult for shareholders to force a sale.

Even if Bitcoin’s price were to fall significantly—by over 50% to $33,000—analysts estimate that Strategy’s assets would still outweigh its debts by more than 100%. Unless a major financial crisis occurs, the company is expected to hold onto its Bitcoin for the long term.

Grayscale’s Ethereum ETF staking proposal

Meanwhile, crypto investment firm Grayscale is looking to add staking to its Ethereum ETFs. The company has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to allow its Ethereum Trust ETFs to participate in staking, where investors lock up Ethereum to help secure the network and earn rewards.

The SEC has now acknowledged the proposal, meaning it will review the request. If approved, Grayscale’s Ethereum ETFs could become more attractive to investors who want exposure to Ethereum’s staking rewards without directly holding the asset. The regulator has 45 days to approve, reject, or extend the review process.

One key aspect of the proposal is that staked Ethereum would remain under full custodial control, reducing risks for investors. Additionally, Grayscale would not pool its Ethereum with other validators, helping to avoid regulatory issues that have troubled other staking providers.

U.S. lawmakers target crypto ATM fraud

In response to a rise in scams involving cryptocurrency ATMs, U.S. Senator Dick Durbin has introduced the Crypto ATM Fraud Prevention Act. The proposed law aims to protect users from fraud, which has led to over $110 million in losses since 2020, according to the Federal Trade Commission.

One case highlighted by Durbin involved a victim who lost $15,000 after a scammer, pretending to be a law enforcement official, told him he could avoid arrest by making a Bitcoin ATM deposit. Because crypto transactions are irreversible, victims often have no way to recover lost funds.

The proposed law includes new protections such as:

• A daily transaction limit of $2,000 for new users.
• A requirement for ATM operators to verify transactions over $500 to ensure users aren’t being scammed.
• Full refunds for victims who report fraud within 30 days.

Crypto ATMs have become more popular, with nearly 30,000 now installed across the U.S. However, some countries have banned them altogether due to fraud concerns. If passed, the new law would be one of the first major regulations specifically targeting crypto ATMs.

GameStop considering Bitcoin as a treasury asset

In another major development, video game retailer GameStop may be considering adding Bitcoin to its corporate reserves. A proposal from Strive Asset Management suggests that GameStop convert up to $5 billion of its cash into Bitcoin, making it the first major gaming company to adopt such a strategy.

The proposal was signed by Strive CEO Matt Cole and has already been acknowledged by GameStop Chairman Ryan Cohen, who shared it on social media. However, the company has yet to confirm whether it will act on the suggestion.

Strive argues that Bitcoin is a better long-term asset than cash, especially with new accounting rules that allow companies to recognize unrealized Bitcoin gains as profit. The firm also warned against investing in other cryptocurrencies, saying Bitcoin is the only true “store of value” in the space.

Market rebounds after crypto sell-off

After a rough trading day, several altcoins have rebounded strongly. Story IP has surged 32.4%, now trading at $6.55, while Celestia has gained 23.8% to reach $3.87. Maker, one of the original decentralized finance (DeFi) tokens, is also up 21.5% to $1,722.

Bitcoin, however, remains under pressure, currently trading around $88,000 after a 1% drop in the last 24 hours. Analysts believe that while Bitcoin is facing headwinds, investors are rotating capital into select altcoins rather than pulling out of the market entirely.

Overall, the crypto market remains volatile, with investors closely watching regulatory developments and institutional activity. While concerns over Strategy’s Bitcoin holdings persist, analysts maintain that forced sales are unlikely in the near term.